A new report from Charter Keck Cramer revealed significant challenges in Australia’s apartment market, with high construction costs and labour shortages stalling developments, Property Council reported.
In Melbourne, BTS apartment launches have hit a 15-year low, with many projects deemed financially unfeasible.
“There is an urgent need for government intervention,” the report said, highlighting the need for streamlined approvals and developer support.
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Sydney’s apartment market is falling far short of targets, with only 8,400 BTS and BTR apartments completed in FY2024, compared to the goal of 52,680.
Construction costs have surged 30-50% since the pandemic. In Brisbane, demand remains strong, but only 3,000 units are expected to be built annually due to high costs and shortages.
Perth and Adelaide are also grappling with low BTS apartment commencements, the lowest in over 15 years.
A lack of builders willing to take on high-density projects due to elevated construction costs is a major issue in both cities.
“Investor-focused developments are facing thin demand, and incentives are necessary to boost interest,” the report noted regarding Adelaide.
Despite these challenges, ABS data showed a 10.4% increase in dwelling approvals in July, driven by a 32.1% rise in high-density apartment approvals.
“Private dwellings excluding houses rose 32.1% after a low June result,” said Daniel Rossi, ABS head of construction statistics. However, total approvals remain 5.1% lower than the five-year average.
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